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11/18/96 Thornquist/Offer to PurchaseN �s _11-ci�a,tits PROFESSIONAL HOMES HANDLING ACREAGE OFYOUR LOTS 'Water REAL ESTATE RANCHES NEEDS REALTY IBUSINE3S BOX 460E LAKESIDE, MT 59922 PROPERTIES (406) 844-3395 FAX (406) 844-2031 November 18, 1996 Mr. Lawrence Gallagher City of Kalispell Planning, Economic & Community Development Dept. P.O. Box 1997 Kalispell, Montana 59903-1997 Re: Haven Field Kalispell, Montana Dear Mr. Gallagher: Enclosed please find a proposal to purchase Havenfield, consisting of 4.1 acres, by Regency Inns Management, Inc. of Sioux Falls, South Dakota. This offer is presented to the City of Kalispell by Woods and Water Realty, of Lakeside, Montana, as Buyers Agent for Regency Inns Management, Inc, Broker Fees will be paid at the time of closing from the proceeds placed in escrow by the Buyer in the amount of $58,000.00 or 8% of the agreed upon purchase price. Should you or anyone within the City of Kalispell have any questions regarding this proposal, please do not hesitate to call me. Sin rely, David C. Thomquist Broker Associate Havenfield Kalispell, Montana Proposal This proposal is being presented to the City of Kalispell, Montana, to develop Parcel Number 2, an approximate 4.1 acre piece known as Havenfield (a softball field), and also for the use of the Lion Park Street, a 22,825 rectangular piece. Regency Inns Management and other entities would like to make a proposal to the City of Kalispell, Montana, for the development of Parcel Number 2 into a complex of two hotels with approximately 80 units each and a full -service restaurant, and for the use of Lion Park Street as a parking area . As you will see by the enclosed site plan (Exhibit A), two hotels fit nicely surrounding the 5,500 square - foot restaurant. The first of the hotels and the restaurant will be constructed as soon as possible with an early 1998 opening date, and the hotel will be a nationally recognized, franchised property similar to the enclosed floor plan. The second hotel would be constructed as demand warrants so as to not drastically impede the hotel market. We foresee the exterior to be like the photograph of the Kelly Inn, West Yellowstone, Montana. As you will see in the photo elevations, the restaurant will be a full -service restaurant, similar to Jake's in Billings, Montana. As you see, Regency Inns Management is bringing to the table projects, thoughts and ideas that have been successful elsewhere. We bring to Kalispell proven, successful ideas and a proven track record. We propose to lease Lion Park Street for One Dollar ($1.00) per year to be used jointly as a parking lot by the hotels, restaurant and the park. This proposal is assuming that all correct zoning is in place for the above -mentioned development, and also that all services — i.e., water, sewer, electric, phone, etc. — are either on the property or adjoining the property. We at Regency Inns Management believe this proposed development fits nicely with the City of Kalispell and helps dress up the entrance to the city. Further development of this quality will only enhance and beautify the entrance to the city by making this an eye -appealing presentation to the visitor. We propose to nicely landscape the property we purchase and also landscape around the parking lot of Lion Park Street. To add to the ambience of the area, we propose to donate a minimum of four flower planters to Lion's Park. Value of Improvements Two 80-unit hotels and a 5,500 square -foot restaurant along with the values of construction, FF&E packages, personal property, etc. as a total finished project between $6.1 million and $8.5 million, depending on franchise quality, cost of construction, etc. This proposed improvement and development when completed is estimated to bring in approximately $2.6 million combined annual gross revenue. Offer Regency Inns Management, Inc. and an assignee would like to offer to the City of Kalispell, Montana, Seven Hundred Twenty -Five Thousand Dollars ($725,000.00) for Parcel 2 known as Havenfield (178,596 square feet) and for the use of Lion Park Street for parking area. We would propose a One Dollar ($1.00) per year lease. Broker Fees. Regency agrees to agency representation, and broker's or agents' fees will be paid at time of closing from proceeds placed in escrow by the Buyer for the proposed price for this land. The broker's fee will be subtracted from the total price offered for Parcel 2. Exhibit A Site Plan Exhibit B Hotel Elevation (Photos) Exhibit C Restaurant Elevation (Photos) Exhibit D Purchase Agreement Exhibit E Copies of Fairfield Brochure PURCHASE AGREEMENT THIS AGREEMENT is made and entered into as of this 15th day of November, 1996, by and between the City of Kalispell, Montana (hereinafter the "Sellers"), and Regency Inns Management, Inc. and/or its assignee, a South Dakota Corporation, with its principal office located at 2600 North Louise Avenue, Sioux Falls, South Dakota 57107 (hereinafter the "Buyer"). WHEREAS, Sellers are the owners of the land which is located in the City of Kalispell, Montana; and WHEREAS, the Buyer desires to purchase from the Sellers the land which is located in the City of Kalispell, Montana, for construction of two motels and a restaurant, and WHEREAS, the Sellers and Buyer desire to set forth their understanding with regard to the purchase of the land by the Buyer; NOW, THEREFORE, the parties agree as follows: 1. Sellers agree to sell and Buyer agrees to purchase from Sellers the real estate located in Kalispell, Montana (Exhibit A), legally described as follows: ................................................_._... .........._..._..................................... ........................................................................................................................... Parcel2>Le. aldescr>:tQtr:tobern :setelat:a:later:date g:.: 1, (herein sometimes referred to as the "Premises") 2. Purchase Price. The purchase price to be paid by Buyer to Sellers shall be the sum of Seven Hundred Twenty -Five Thousand Dollars ($725,000.00), which purchase price shall include only the Premises. 3. Payment of the Purchase Price. The purchase price shall be paid by Buyer to Sellers at the following times and in the following manner: A. The sum of Twenty -Five Thousand Dollars ($25,000.00) as an earnest money down payment, put in escrow upon acceptance of this Purchase Agreement. B. The balance of the purchase price in the amount of Seven Hundred Thousand Dollars ($700,000.00) shall be due and payable to the Sellers at closing. 4. Default. In the event of any default hereunder by Buyer which is not cured within a period of thirty (30) days following notice from Seller to Buyer that such default exists, Seller's sole remedy shall be to cancel this Agreement and retain all Earnest Money paid hereunder as liquidated damages for Buyer's breach. Sellers and Buyer agree that, in the event of breach by Buyer, the damages to Sellers will be incapable or very difficult of accurate estimation and that there has been a reasonable endeavor by Sellers and Buyer to fix fair compensation and that the Twenty -Five Thousand Dollars ($25,000.00) Earnest Money as liquidated damages to Sellers bears a reasonable -1- relation to probable damages and is not disproportionate to any damages reasonably to be anticipated. Nothing contained herein shall deprive Buyer of the remedy of specific performance. The obligations of Buyer are intended to be nonrecourse. Time is of the essence. If a dispute arises between the parties hereto concerning this Agreement or any provision thereof or obligation thereunder, then the nonprevailing parry shall pay any and all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder, including without limitation, court costs and reasonable attorneys' fees and disbursements, which obligations shall survive the delivery of the Deed. 5. Closing Date. Sellers and Buyer mutually agree to close said sale on or before January 31, 1997, unless the parties mutually agree to change the closing date. 6. Possession. Possession of the Premises shall be given to Buyer by Sellers at closing. 7. Title Insurance. Sellers agree to provide to Buyer an owner's commitment for title insurance (on ALTA Form 1990-B) insuring the Premises purchased hereunder for the sum of Seven Hundred Twenty -Five Thousand Dollars ($725,000.00), insuring good and marketable title to be in the Sellers' name; subject, however, to easements and rights -of -way for utilities, highways and storm sewers of record. The cost incurred in obtaining the title insurance shall be shared equally between the Sellers and the Buyer. 8. Sellers' Representations and Warranties. As a further inducement to Buyer to enter into this Purchase Agreement and to consummate the transaction contemplated by this Purchase Agreement, Sellers, and each of them do hereby represent and warrant to Buyer and agree as follows: A. Sellers have good and insurable title to the premises and the personal property and all other property to be transferred hereunder. The title to be granted and conveyed shall be merchantable, fee simple title, free and clear of all matters except those exceptions disclosed on the Title Commitment, if approved, or otherwise waived by Buyer or provided for herein; B. Sellers have full right, power, and authority and have taken all requisite action to enter into this Purchase Agreement and to grant, sell, and convey the premises and the personal property and all other property to be transferred hereunder to Buyer as provided in this Purchase Agreement and to carry out its obligation as set forth in this Purchase Agreement; C. Sellers have not received notice from any city or other governmental authority of any violation affecting the premises and the personal property and all other property to be transferred hereunder except as disclosed in writing to Buyer prior to the execution of this Purchase Agreement, if any; D. There are no pending improvements, liens, or special assessments to be made against the premises by any governmental authority or third party, except as otherwise disclosed in writing to Buyer prior to the execution of this Purchase Agreement; -2- E. No work has been performed or is in progress by Sellers or at the direction of Sellers, and no materials have been furnished to the premises or any portion thereof, which might give rise to mechanic's, materialman's, construction, or other liens against the premises; F. No consent or approval of any person, entity, or government agency or authority is required with respect to the execution and delivery of this Purchase Agreement by Sellers and, as of the closing date, no unobtained such consent or approval will be required with respect to the consummation by Sellers of the transactions contemplated hereby or the performance by Sellers of its obligations hereunder; G. Sellers are not and never been a "foreign person", as that term is used in Section 1445 of the Internal Revenue Code of 1954, as amended; H. Sellers shall not grant, sell, convey, or encumber the premises and the personal property and all other property to be transferred hereunder prior to the closing date; I. The premises and the personal property and all other property to be transferred hereunder are not subject to any leasehold interest and Sellers further agree that Sellers will not enter into any lease of the premises and the personal property and all other property to be transferred hereunder or any part thereof, J. There are no disputes concerning the lines and corners of the premises, which lines and corners are clearly marked and there are no encroachments upon the premises; K. There is no indebtedness outstanding and no outstanding or unpaid bills incurred for labor and material in connection with the premises, or for the service of architects, surveyors, or engineers in connection with the premises; L. All streets necessary to serve the premises are being installed and will be dedicated and accepted for use and maintenance by the closing date by application to governmental entities and there are no pending street changes that will materially alter such service to the premises; M. There are no taxes, assessments, or liens against the premises for any present or past - due taxes or for paving, sidewalk, curbing, sewer, or any other street or other improvements of any kind, with the exception of real estate taxes which are not yet due and payable; N. As of the closing date, there will be no outstanding, pending, or threatened suits, judgments, executions, bankruptcies, condemnation proceedings, zoning changes, or any other proceedings pending or on record in any court of any nature or before or by any governmental or administrative agency which could in any manner now affect Buyer's title to, possession of, or use of the premises and the personal property and all other property to be transferred hereunder, or which could now or hereafter constitute a lien upon the premises and the personal property and all other -3- property to be transferred hereunder or materially or adversely affect or change the premises and the personal property and all other property to be transferred hereunder; O. Sellers are not surety on any bond or indebtedness wherein through the default thereof, a lien against the premises and the personal property and all other property to be transferred hereunder would be created without further legal action; P. As of the closing date, there will be no recorded or unrecorded liens, security interests, security agreements, or UCC financing statements against the premises and the personal property and all other property to be transferred hereunder or any part thereof, and Q. The premises are not subject to any federal, state, or local "Superfund" lien proceeding, claim, liability, or action, or the threat or likelihood thereof, for the cleanup, removal, or remediation of any "hazardous substance" from the premises and Sellers have not caused and will not cause, and to the best of Sellers' knowledge, there never has occurred the release, leak, discharge, spill, disposal, or emission of any "hazardous substance" as of the date hereof. As used in this Purchase Agreement, "hazardous substance" means any substance that is toxic, ignitible, reactive, or corrosive, and that is regulated by any local government, the State of Wyoming, or the United States of America. "Hazardous substance" includes any and all materials or substances that are defined as "hazardous waste", "extremely hazardous waste", or a "Hazardous Substance" pursuant to state, federal, or local governmental law including without limitation, CERCL, SARA, RCRA, the Clean Water Act, The OSHA Act, or the Toxic Substances Control Act. "Hazardous Substance" includes, but is not restricted to asbestos, petroleum products, nuclear fuel, or materials, known carcinogens, urea formaldehyde, foamed -in -place insulation, and polychlorinated biphenyl (PCBs). In the event that any of the representations and warranties set forth in this Paragraph 8. are not true in any material respect as of the closing date or if Sellers otherwise defaults hereunder, Buyer may terminate this Purchase Agreement on or at any time prior to the closing date and the Earnest Money shall be immediately returned to Buyer. The warranties and representations set forth in this Paragraph 8. shall survive the closing for the benefit of Buyer. Sellers shall defend, indemnify, and hold harmless Buyer, and shall reimburse Buyer for, from, and against each and every demand, claim, loss (including any diminution in value), liability, damage, fine, penalty, cost, and expense (including, without limitation, attorney fees and consultant and expert fees imposed on or incurred by Buyer) directly or indirectly relating to, resulting from, or arising out of any material inaccuracy in any representation or warranty set forth in this Paragraph 8. 9. Buyer's Representations and Warranties. Buyer represents and warrants as follows: A. That the Buyer has the right, power and authority to purchase the Premises and the personal property subject to the terms and conditions as provided under this Agreement, and to execute, deliver and perform its obligations under this Agreement; B. To the Buyer's actual knowledge, there exists no action, suit, litigation or proceeding which would limit the Buyer's ability to purchase the Premises and the personal property and to perform the terms and conditions of this Agreement. 10. Closing Documentation. A. At the closing, the Sellers shall deliver to the Buyer a standard form of Montana Warranty Deed conveying title to the Premises; and B. At the closing, the Sellers shall deliver to the Buyer a Bill of Sale transferring to the Buyer all of the Sellers' rights, title and interest in and to the personal property. 11. Operating Expenses, Costs, Charges and Property Taxes. The Sellers shall be responsible and shall pay for all operating expenses which have accrued or shall become due prior to the closing date. All operating expenses shall be read and finalized, if reasonably possible, as of the closing date. All property taxes will be prorated to date of closing. 12. Risk of Loss. Until the closing date, Sellers shall bear the risk of loss to the Premises and to the personalproperty due to fire or any other casualty. Accordingly, until said closing occurs Sellers shall keep in full force and effect a policy insuring the Premises and personal property against loss by all risks insured against under a standard form of all risk coverage. 13. Zoning. The Seller represents that the property is properly zoned for motel and restaurant use for the City of Kalispell, Montana. 14. Highway Entrance. Purchase is subject to satisfactory review by Buyer of any changes or curb cuts made by review of the highway department. 15. City of Kalispell. Purchase is subject to satisfactory review by Buyer of any changes made by review of City of Kalispell or other governing agency. 16. Soil Tests. Purchase is subject to satisfactory review by Buyers of soil test. 17. Restaurant. Purchase is subject to Jake's of Billings, Montana, or its representatives agreeing to purchase part of site for construction of a full -service restaurant. 18. Lease of Lion Park Street. We lease for One Dollar ($1.00) per year and develop Lion Park Street, a 22,825 square -foot rectangular piece (approximately .524 acres), to be jointly used as a parking lot for the restaurant, hotels and Lion Park. -5- 19. Representation by Agency. The Buyer agrees to agency representation and is represented by Dave Thornquist. 20. Brokerage Fees. Broker's or agent's fees will be paid at time of closing from proceeds placed in escrow by the Buyer with full disclosure. Brokerage fees to be subtracted from the offering price. 21. Notices. Notices shall be given under this Agreement upon delivery to the addresses set forth below either by certified mail or by delivery from a nationally -recognized, overnight delivery service. Notices shall be delivered to the following addresses: To Sellers: To Buyer: David Sweet Regency Inns Management, Inc. 2600 North Louise Avenue Sioux Falls, SD 57107 22. Binding Effect. This Agreement shall be binding upon the parties hereto, their heirs, successors and assigns. Dated the year and date first above written. "Sellers" "Buyer" Regency Inns Management, Inc., a South Dakota Corporation Im